December 14, 2021

How are non-disclosure agreements (NDAs) and forced arbitration clauses in employment agreements used to silence survivors of sexual harassment? In late October, a virtual Clayman Conversations event unpacked those questions with activists Ifeoma Ozoma, Gretchen Carlson and Julie Roginsky. The conversation, led by Clayman Institute Director Adrian Daub, began with an anonymous poll of the audience to demonstrate the urgency of the issue: The audience members were asked whether they have signed an NDA or a forced arbitration clause in their current employment contract. Most of the audience replied they did not know.

Ozoma is the founder and principal of Earthseed; she co-sponsored the Silenced No More Act, which allows every individual in California to share information about discrimination or harassment they have faced on the job, even after signing an NDA. Carlson is a journalist, podcaster, author and empowerment advocate and co-founded the non-profit Lift Our Voices to eradicate forced arbitration and NDAs. Roginsky is co-founder of Lift Our Voices and has fought relentlessly against non-disclosure agreements and other tools that organizations use to silence women from publicly disclosing their experiences with toxic work environments.

Starting with the scope of the problem, Carlson described the exponential growth in the frequency with which forced arbitration clauses are used: “In 1991, 2 percent of American corporations were using arbitration clauses. It is estimated that by 2024, 80 percent of companies will use forced arbitration clauses to silence their employees.” Carlson further explained why forced arbitration clauses are so problematic. Forced arbitration clauses in employment contracts dictate that disputes between an employer and employee are to be resolved by a neutral third party, called an arbitrator, rather than in court. The arbitrator serves as a private judge, hearing evidence and making a ruling on the outcome of the dispute. Most commonly, the arbitrator’s decision is final, and thus cannot be appealed.. It is often presented to employees as a good thing: A quick and easy way to resolve disputes instead of embarking on long and expensive litigation. However, arbitration usually benefits the employer, because there is no binding precedent the way there would be in a court case. 

“Lift Our Voices is currently focusing on conducting research, in collaboration with the Clayman Institute, to measure how many victims of workplace sexual harassment have been pushed out of their career of choice using forced arbitration clauses and NDAs.”

As Carlson pointed out, the confidentiality of arbitration outcomes prevents accountability and damages the careers of the targets of harassment. While both Carlson and Roginsky are bound by NDAs as a result of their settlement with Fox News when it comes to their experiences with former Fox executive Roger Ailes, they provided the example of former Fox anchor Bill O’Reilly, who harassed multiple women. As Roginsky pointed out, O’Reilly harassed multiple women for decades. His victims were forced into arbitration where each case was dealt with in isolation and the victims were pushed out of their jobs, while O’Reilly continued to work. His victims could not disclose the circumstances under which they were let go, leaving others to assume it was their poor performance. None of O’Reilly’s victims currently work in television. Carlson added that Lift Our Voices is currently focusing on conducting research in collaboration with the Clayman Institute.

Carlson explained that the low settlements in arbitration cases are yet another way to prevent victims of workplace discrimination or abuse from accessing justice. In most workplace discrimination cases, victims cannot afford the high hourly rates of legal representation. Most victims can afford representation only based on a contingency fee -- when a lawyer gets paid some percentage of the verdict awarded by a court -- often around 30 percent, depending on multiple factors. Because arbitration awards to victims are low, especially in comparison with verdicts awarded by courts, many lawyers will not take cases with a forced arbitration clause; the amount of work required is unlikely to be compensated properly by a percentage of a small award. 

Forced arbitration clauses are a deeply entrenched legal problem since they are rooted in the Federal Arbitration Act of 1925. Accordingly, to change the role of arbitration, federal legislation must be amended. While Carlson has been promoting legislation to limit forced arbitration and secured the support of Sen. Marsha Blackburn just a few hours before the virtual event, it is unclear whether the amendment will receive sufficient support from Republicans to be enacted.  

“Ozoma successfully advocated for a California “Silenced No More” Act (SB 331), which prevents companies from enforcing non-disclosure clauses and ... allows victims of intersecting discrimination to speak about their experiences.”

Ozoma successfully advocated for a California “Silenced No More” Act (SB 331), which prevents companies from enforcing non-disclosure clauses, currently prevalent in many employment contracts. The law, which goes into effect in January 2022, voids nondisclosure and non-disparagement clauses that stop employees from discussing their experiences of workplace discrimination or harassment based on their membership in any protected class (age, ethnicity, disability, sexual orientation, religion, national origin, pregnancy and race). By expanding the protection of the law beyond sexual harassment, the law allows victims of intersecting discrimination to speak about their experiences. For Ozoma, the need for the law was rooted in a personal experience, as she encountered gender and race discrimination during her employment with Pinterest. When she came forward with the discrimination she experienced, a previous and weaker version of SB 331 only protected her disclosure of gender-based harassment. She could have been sued by Pinterest for disclosing the racial discrimination she experienced, since her contract included very broad nondisclosure and non-disparagement clauses. 

Roginsky explained what a seismic shift the bill Ozoma co-sponsored will make. Once in effect, California will provide strong protections against silencing of victims of workplace discrimination and harassment. The nation's strongest NDA law has been passed in New Jersey, after advocacy by Roginsky and others, on the heels of a public scandal about the use of NDAs in New Jersey Gov. Phil Murphy’s campaign.

Roginsky points out that passing laws against NDAs in cases of workplace discrimination still encounters a lot of resistance from politicians, even in states as liberal as Massachusetts. Moreover, professional organizations such as the Chamber of Commerce strongly oppose the measures, making the political viability of such legislation questionable.

The difficulty in passing such legislation led the panelists to emphasize public pressure on corporations and shareholders as an important tool to be used in parallel to legislative efforts. Ozoma explained that paying settlements to victims of workplace harassment is a sign of poor corporate governance: When Pinterest paid more than $20 million to settle a gender discrimination lawsuit with the former COO, that was $20 million dollars of the shareholders’ money, meant to be spent on growing the company rather than covering up unlawful behavior. 

The panelists concluded by emphasizing the power of collective bargaining for employees to fight against such silencing tools being included in employment contracts.